The present invention relates generally to methods and apparatuses for voting shares of corporations held by investors, and more particularly to a method and apparatus for voting shares held by an investor in a [large] publicly traded corporation.
Traditionally, an issuer of shares (e.g., a publicly-held corporation) sends a copy of the corporate action notification or the proxy statement to each individual shareholder via regular mail. When the shareholders receive it, they analyze the corporate action notification or proxy statement, and depending on the type of notification, the shareholders may mark their votes on the action notification document or the proxy card and return the papers to the issuer via regular mail. For proxies, the shareholders can alternatively indicate their preferences by attending the shareholders' meeting, during which the votes are formally cast. At the end of a voting period, the corporate election official manually goes through all the returned corporate action notifications and proxy voting cards and counts the votes for each issue. These votes are added to the votes that were cast by individuals attending the shareholders' meeting. This manual process is very labor intensive, slow, complicated and prone to error, as well as costly to the issuer.
To attempt to remedy these problems, some corporations, such as Microsoft Corporation, send their proxies by electronic mail to their shareholders, thereby allowing shareholders to return their proxy by simply replying to the email. While simplifying the process somewhat for the corporation, this electronic mail-based process still requires shareholder attention to every received proxy statement and corporate action notification.
The current system of mailing proxies to elicit shareholder votes was devised in an era when investors typically held relatively small numbers of different securities. For example, investors typically owned a handful of stocks. As the number of publicly traded companies has increased significantly along with a concomitant awareness of modern portfolio theory (i.e., the idea that diversification of one's investments will result in statistically better and predictable overall returns), the numbers of different securities held by an individual has been increasing to the point where managing one's proxies can become difficult, if not cumbersome. According to the theory, investors should hold as many as twenty or thirty different securities to be sufficiently diversified against risk. Moreover, if the number of Initial Public Offerings continues at the recent pace, the number of different securities available to individual investors may become truly large.
In apparent recognition of the difficulty in managing one's proxies, a system for managing proxies was developed, ProxyEdge 2000, which is available from ADP (Automatic Data Processing, Inc.) of Roseland, N.J. ProxyEdge 2000 is a Windows®-based software package that allows one to electronically vote and maintain records on publicly traded securities for accounts custodied at banks and brokers. While simplifying the record-keeping aspects to some degree, this system still requires users to review proxy statements and determine how to vote their shares.
Given the extremely small percentage voice an individual shareholder owns in a publicly traded stock, the amount of effort required to manage and vote one's proxies is significantly disproportionate with such an extremely small voice, hence many investors currently ignore proxies.
In addition, many small investors do not vote their proxies because they do not understand the issues discussed in the proxy statements (or are unwilling to invest the time to understand the issues), they do not know any of the individuals running for the board of directors, nor do they believe their votes will have any impact on the result. The end result is that management of large publicly traded companies can become entrenched, ossified and unresponsive to the concerns of shareholders, despite what at least superficially appears to be a relatively representative process.
The present invention is therefore directed to the problem of developing a method and apparatus for enabling a shareholder to manage and vote shares in a simple and efficient manner, which is particularly suitable for voting and managing large numbers of proxies.